The creation of Europe’s largest free-standing consumer electronics retailer is set to prompt a wave of mergers and acquisitions as the company seeks to keep Amazon.com Inc. at bay.
The parent of Germany’s MediaMarkt and Saturn, which began trading yesterday under a separate listing from former parent Metro AG, is vowing to play a pro-active role in cementing the company’s No. 1 position in a European business roiled by the rise of e-commerce.
“We want to lead the European consolidation in this industry,” Pieter Haas, chief executive officer of the newly formed Ceconomy AG, said in an interview in London.
When consumers opted for the convenience — and often lower prices — of buying refrigerators, toasters and music online, US chains such as Borders Group and Circuit City fell by the wayside, leaving Best Buy Co and Wal-Mart Stores Inc to battle it out with Amazon.
In some European markets, electronics retailers have sought size to increase their buying power and match the US online giant’s prices in a bid for survival.
France’s Fnac, a seller of everything from books to cameras, last year bought domestic appliance chain Darty to form a company with more than 7 billion euros (US$8 billion) in revenue and about 660 stores.
A 2014 deal in the UK created Dixons Carphone PLC, the country’s largest consumer electronics company, with revenue of £9.7 billion (US$12.5 billion) last year.
Ceconomy, which does not operate in France or the UK, last year had sales of just under 22 billion euros, with about half of that in German-speaking countries.
Despite the round of deals, the business remains fragmented in much of Europe, with big chains and mom-and-pop shops vying to compete with Amazon.
Ceconomy says it holds the top position in nine of its 15 countries, and Haas said the company wants be the leader everywhere it operates “because size matters.”
That is especially true in Russia, where Metro watched from the sidelines as billionaire Mikhail Gutseriev combined M.Video and two other retailers to create the biggest consumer player in the country with about a 30 percent share.
With less than 5 percent of the market, Ceconomy cannot compete effectively, Haas said, indicating that the company may seek an exit to prevent further losses.
Ceconomy’s operations in Sweden, where it competes with a Dixons Carphone unit and other players, are also losing money.
Turkey, on the other hand, is growing rapidly and has the potential to become one of the company’s largest markets, Haas said.
Even where Ceconomy holds the top spot, competition is relatively high, Bloomberg Intelligence analyst Chris Chaviaras said, as its market-share lead is smaller than the position Dixons Carphone enjoys in its markets.
Along with a bigger exposure to lower-margin entertainment and computing products, that makes Ceconomy’s targets of increasing sales by at least 3 percent a year and lifting operating profit to 5 percent of sales “ambitious,” he said.
Some of Ceconomy’s moves to expand have failed. In 2011, the company sold its 34 Saturn stores in France. Two years later it pulled out of a venture with Taiwan’s Foxconn Technology Group (富士康科技集團) to expand into China that it had announced in 2010.
The separation into food and electronics is intended to focus Ceconomy and the food business it is breaking away from.
At yesterday’s opening, the combined value of the electronics chain and Metro Wholesale & Food Specialist AG was 10.2 billion euros, compared with a market capitalization of 9.5 billion euros for the old Metro AG as of Wednesday’s close — a gain of about 7 percent.
In the past five years, Metro investors had little reason to celebrate, with the shares barely appreciating. Best Buy almost doubled during that time, and Fnac Darty almost quadrupled.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day